Tax Reform Bill: What changes will IVA have?

You can download the document prepared by our Tax Group by clicking here.

On january 29 of this year, the Government submitted to Congress the Bill on Compliance with Tax Obligations within the Pact for Economic Growth, Social Progress and Fiscal Responsibility called “Bill on Compliance with Tax Obligations”.

The bill contemplates the amendment of several legal bodies, the most important of which are the Tax Code, the Income Tax Law and the IVA Law. In addition, it incorporates a new transitory regime for the regularization of foreign capital.

The main IVA implications are detailed below.

IVA on the acquisition of goods purchased abroad

The regime applicable to digital services to sales of goods located abroad and remote services in general.

It is established that the operator of a digital intermediation platform will be considered a IVA taxpayer as if it were a regular seller or service provider, unless the respective buyer or user is a IVA taxpayer, in which case the change of subject will operate and a purchase invoice must be issued.

In the case of platforms that jointly or simultaneously facilitate the respective transaction, the taxpayer will be considered to be the one that authorizes or precedes the payment of the taxable transaction.
With respect to taxpayers who do not have domicile or residence in Chile, they will be subject to the existing simplified taxation system for digital service providers.

The possibility of assignment as withholding agent of issuers of payment cards or payment systems in general is extended, when the foreign supplier is not subject to the simplified system.

Movable tangible goods, located abroad, acquired remotely from a non-domiciled or resident in Chile, by a person who is not a seller or service provider, will be deemed to be located in Chile, when the goods are destined for the national territory, provided that their price does not exceed USD 500.

Effective: These amendments will be effective as of January 01, 2025.

IVA on digital services

In accordance with the previous amendment, the special provisions of the digital IVA are repealed, since all services are now taxed with IVA without distinction, except for specific exemptions.

Validity: These amendments will be in force as from January 1, 2025.

Power to assess the tax payable

In the context of a business reorganization, the SII may liquidate and remit IVA on movable and immovable tangible assets that are part of the fixed assets, carried out by the company that creates or subsists on the occasion of a business reorganization, when the main purpose of the reorganization is to avoid the payment of taxes.

The SII may reclassify as a sale of fixed assets, the sale of shares, social rights, quotas, bonds and other securities convertible into shares, quotas or social rights, if at least 50% of their market value comes from the value of the fixed asset (real estate), which is owned, directly or indirectly, whose securities are sold, and the sale is made with the main purpose of avoiding the tax that would have been generated if the underlying asset had been sold directly.

When the tax payable by a taxpayer cannot be clearly determined, the SII may assess the sales or services rendered, considering the information in its possession. Likewise, the possibility is incorporated for a taxpayer to request the assessment of the IVA payable, when it submits information that shows that it is not in a position to determine it by itself.

Effective date: These amendments will become effective as of the first day of the month following the month in which the law is published in the Official Gazette.

IVA refund on acquisition of fixed asset goods

It is stipulated that, once a tax credit refund has been obtained for the acquisition of fixed assets, it is established that the refund amounts for the following years cannot be less than 1/10 of the amounts received for the year.

In the event that at December the tax debits of the year do not exceed such amount, the difference must be added in the tax return of that month to reach it.

Validity: Those who have accessed or requested this benefit shall be governed by the rules in force at the date of approval.

Export IVA

It is established that the amount of the refund must be determined by applying to the total tax credit of the corresponding period, the percentage that represents the value of the exports with the right to tax recovery in relation to the total sales of goods and services, considering in both cases, the last twelve consecutive tax periods.

Effective date: These amendments will become effective after 6 months following the issuance of the supreme decree that replaces the current decree 348 of 1975, which sets the conditions for exporters to recover IVA. This new decree must be issued within 3 months after the law is published in the Official Gazette.

You can download the complete document in our e-book section here.

For more information on these topics you can contact our Tax team:

Rodrigo Albagli | Partner | ralbagli@az.cl

Álvaro Rosenblut | Partner | arosenblut@az.cl

David Ancelovici | Director Tax Group | dancelovici@az.cl

Pablo Trucco | Senior Associate | ptrucco@az.cl

Elisabet Pinto | Associate | epinto@az.cl

Valentina Herrera | Associate | vherrera@az.cl

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